Mexico's booming car industry selling unsafe cars

Lax safety requirements in Mexico and Latin America lead to surge in auto-related fatalities
Associated Press
Nov 29, 2013

In Mexico's booming auto industry, the cars rolling off assembly lines may look identical, but how safe they are depends on where they're headed.

Vehicles destined to stay in Mexico or go south to the rest of Latin America carry a code signifying there's no need for antilock braking systems, electronic stability control, or more than two air bags, if any, in its basic models.

If the cars will be exported to the United States or Europe, however, they must meet stringent safety laws, including as many as six to 10 air bags, and stability controls that compensate for slippery roads and other road dangers, say engineers who have worked in Mexico-based auto factories.

Because the price of the two versions of the cars is about the same, the dual system buttresses the bottom lines of automakers such as General Motors and Nissan. But it's being blamed for a surge in auto-related fatalities in Mexico, where laws require virtually no safety protections.

"We are paying for cars that are far more expensive and far less safe," said Alejandro Furas, technical director for Global New Car Assessment Program, or NCAP, a vehicle crash-test group. "Something is very wrong."

In 2011, nearly 5,000 drivers and passengers in Mexico died in accidents, a 58 percent increase since 2001, according to the latest available data from the country's transportation department. Over the same decade, the U.S. reduced the number of auto-related fatalities by 40 percent. The death rate in Mexico, when comparing fatalities with the size of the car fleet, is more than 3.5 times that of the U.S.

Nevertheless, Mexico hasn't introduced any safety proposals other than general seat belt requirements for its 22-million strong auto fleet. Even then, the laws don't mandate three-point shoulder belts necessary to secure child safety seats.

Brazil and Argentina, on the other hand, have passed laws requiring all vehicles to have dual front air bags and antilock braking systems by next year.

An Associated Press investigation this year found that Brazil's auto plants produce cars aimed at Latin American consumers that lack basic safety features. Like Brazil, Mexico doesn't run its own crash test facility to rank cars' safety before they hit the road.

Dr. Arturo Cervantes Trejo, director of the Mexican Health Ministry's National Accident Prevention Council, said the country has a long way to go to upgrade safety standards, but challenging the nation's $30 billion auto industry could be difficult.

"It's a complicated subject because of the amount of money carmakers bring to this country. The economy protects them," Cervantes told the AP. "But there are plans, there is a strategy. We have a working group with the car industry."

Auto plants cover a swath of central Mexico, cranking out about 3 million cars a year while lifting into the middle class auto hubs in the states of Aguascalientes and Puebla. In a matter of a few years, Mexico has become the world's fourth biggest auto exporter, despite having no homegrown brands, and the country's car fleet doubled between 2001 and 2011, the latest national figures show.

In fact, consumers in "first-world" countries are paying the same or even less for safer cars.

For example, basic versions of Mexico's second most popular car, the Nissan Versa, made in central Aguascalientes, come with two air bags, but without electronic stability control systems, which use sensors to activate brakes when a car loses control.

The sticker price of the newer generation of the sedan comes to $16,000. The U.S. version of the same car has six air bags in the front, on the sides and mounted in the roof, in addition to an electronic stability control system. That sticker price is about $14,000.

Similarly, the basic version of the Chevrolet Aveo, which has been revamped and renamed Sonic, sells for about $14,000 in the U.S. and comes with 10 air bags, antilock brakes and traction control. Its Mexican equivalent, the country's top-selling car, doesn't have any of those protections and costs only $400 less.

Nissan Mexicana spokesman Herman Morfin said in a statement it is "common practice" to add different features, depending on the intended market.

"Because there are many choices of specifications and equipment, specific marketing strategies by country, in addition to the tax difference among countries, states and cities, also including transportation and delivery costs, it's not possible to make a direct comparison among vehicles sold in each market, based on the list price published on the Web," Morfin said.

Morfin said two of Nissan's most popular models — the Versa and the Sentra — are packaged with two air bags and an antilock braking system, which is more than what's required by the Mexican government.

While GM declined repeated requests to comment, an engineer who headed a manufacturing division at the company in Mexico until last year said the company saved on costs by not adding safety features.

"For the company to make more net profit and so that cars are sold at more affordable prices, we would toss aside some accessories. Air bags, ABS brakes, those were the first to go," the engineer said. He spoke on condition of anonymity, citing a confidentiality agreement with the company.

Three other engineers who worked with Nissan and GM for four years and are still involved in auto design for other carmakers were interviewed on similar conditions of anonymity, and they confirmed the companies built cars with vastly different safety features depending on where they'd be sold.

The U.S. National Highway Traffic Safety Administration said air bags and electronic stability control have prevented tens of thousands of injuries in auto accidents and reduced fatal crashes by as much as a third in the U.S.

Paco de Anda, the director of the Mexican chapter for the accident-prevention group Safe Kids, said Latin American consumers have to pay extra for those protections.

"Features that are already mandatory in other countries, here they are selling them as optional items," De Anda said. "People here have no education about road safety ... so they don't pay for it."

A GM worker who gets paid $100 a week said people in Latin America cannot afford to buy cars that are fully loaded with safety features.

"We're not first-world countries," said the worker, who asked not to be identified because he was afraid of losing his job at the GM plant in the town of Ramos Arizpe, where Chevrolet Sonics, Cadillac SRXs and Captiva SUVs are assembled.

Yet crash test results show exactly what's being sacrificed for savings.

One of Nissan's most popular models in Mexico, the Tsuru, is so outdated it has only lap seat belts in the back and some versions have no air bags at all. The car is not sold in the U.S. or Europe.

At a recent Latin NCAP crash test presentation, the Tsuru's driver's door ripped off upon impact at only 37 mph. Its roof collapsed and the steering wheel slammed against the crash test dummy's chest. The Tsuru scored zero stars out of a possible five.

When asked about the crash test, Nissan representatives replied in an email that "consumers continue to ask for it because of its durability, reliability and affordability," without responding specifically to the test results. More than 300,000 Tsurus have been sold in Mexico in the past six years, at about $10,000 each.

Carlos Gomez and his wife Diana Martinez were driving their two small children in a red Tsuru from their northern Mexican town of Doctor Arroyo across the length of Mexico to Chiapas state for Holy Week holidays in March. The sky turned dark as they neared central Mexico, and less than 250 miles from home they were hit head-on by a drunken driver in a red Ford Ranger pickup truck.

The couple died from chest and head injuries; the steering wheel struck Gomez's chest and the dashboard crushed his wife's head. The children survived but spent weeks in the hospital. Six-year-old Carlos still wears a cast from the waist down. He cannot walk.

"Their car was way worse off than the car the other boy was driving," said the mother's brother, Agustin Martinez. "We want more robust cars."

The family said the investigation didn't determine whether air bags would have saved the parents' lives, but there was an air bag in the truck that struck them. The driver was not injured.

Furas, of Global NCAP, said changing automaker behavior will require the region's few watchdog groups and especially government regulators to apply far more pressure on automakers.

Volkswagen, for one, began adding two air bags to its Clasico model after the German carmaker learned that Latin NCAP was going to choose the car for crash testing because of its popularity, Furas said. The model sold in Europe and the U.S. as Jetta comes standard with six air bags.

"Mexico has to take a good look at itself, at the problems it's facing," Furas said. "It is selling unsafe cars to its own people, when it can be selling safe cars that it can build."

 

Comments

looking around

"Because the price of the two versions of the cars is about the same, the dual system buttresses the bottom lines of automakers such as General Motors and Nissan. But it's being blamed for a surge in auto-related fatalities in Mexico, where laws require virtually no safety protections."

Corporate greed and a republicans utopia a place where there exists no rules, regulations,laws or unions governing how they do business.

"A GM worker who gets paid $100 a week said people in Latin America cannot afford to buy cars that are fully loaded with safety features.

"We're not first-world countries," said the worker, who asked not to be identified because he was afraid of losing his job at the GM plant in the town of Ramos Arizpe, where Chevrolet Sonics, Cadillac SRXs and Captiva SUVs are assembled."

"Dr. Arturo Cervantes Trejo, director of the Mexican Health Ministry's National Accident Prevention Council, said the country has a long way to go to upgrade safety standards, but challenging the nation's $30 billion auto industry could be difficult.

"It's a complicated subject because of the amount of money carmakers bring to this country. The economy protects them,"

Contango

Re: "Corporate greed and a republicans (sp) utopia"

Thought Pres. Obama "saved" GM?

Better tell the auto union (UAW) pension and health care trusts to dump their GM stock so that they don't appear greedy.

http://abcnews.go.com/Business/s...

Maybe the Mexes are just lousy drivers?

looking around

"Better tell the auto union (UAW) pension and health care trusts to dump their GM stock so that they don't appear greedy."

The UAW would never be so greedy as not to organize these workers in a heartbeat and promote public organization to develop regulations protecting the worker, consumers and the environment of their country. Now that is a republican nightmare! As far as Obama "saved" GM? and your point is?

Contango

Re: "The UAW would never be so greedy,"

Again: The UAW owns GM stock. They're part of the corp. "greed" aren't they?

So why isn't the UAW down in Mex. organizin'?

Since Pres. Obama "saved" GM, aren't he and Democrats culpable for this "greed" and not the Repubs?

looking around

Obama didn't "save" GM, he saved thousands of jobs by helping the industry to survive bankruptcy, at the same time community's depending on these jobs were also "saved" thus giving an opportunity for economic recovery from the collapse brought on by the Bush years.

Just because part of the reorganization resulted in the UAW taking over the management of various benefits programs, and accepted stock as part of the financial transaction does not make them part of corporate greed that they have no say in.

For years the labor force has shown it's loyalty to the company buy purchasing the products that they help build. They also invested in company stock. I have always asked, why would a working man think he is a republican? The republican party never willingly did anything to promote the well being and advancement of the common man and worker.

As to why the UAW has not organized Mexican workers, it is self evident in the quote provided earlier, fear of retribution by the company. It would take another battle on the bridge, and perhaps in time it will.

Contango

Re: "does not make them part of corporate greed that they have no say in."

17.5% ownership in GM makes the UAW retirees' health plan (VEBA) a MAJOR stockholder.

"Via its pension trusts, the union actually owns big stakes in GM and Chrysler,"

http://www.edmunds.com/autoobser...

"The Voluntary Employees’ Beneficiary Association, responsible to the UAW for retiree health care, already has representatives on boards of both the restructured GM and Chrysler."

http://www.thedetroitbureau.com/...

Ya better check also: Wanna bet that many public employee union pension trusts also own GM stock?

looking around

While you may consider 17.5% a major stake, it hardly qualifies as a majority, and surely won't turn the tides of corporate mind set. As to why workers would buy stock, I would say that they have belief in themselves and the products they build that once again sales will come out on top. They hope the value of their stock ownership will rise, although not at the expense of others short falls unlike the company itself who would do so by taking advantage of under regulation and cheap labor.

Contango

Re: "They hope the value of their stock ownership will rise,"

How is that not "greed"?

And yes, a 17.5% ownership throws around a lot of weight.

Contango

Re: "They also invested in company stock."

Why would they buy stock in a "greedy" co.?

Contango

Re: "Obama didn't "save" GM,"

He didn't?

Where were some of those "thousands of jobs" at except GM and Chrysler?

The Big Dog's back

pooh will never concede on anything. That's why you can't have an intelligent discussion with him.

Contango

Re: "intelligent discussion"

Good morning Sunshine!

When you can start and/or engage in one let me know. :)

44846GWP

How's that five year car loan going? lol!!!

Contango

Re: "How's that five year car loan going?"

Fine. Thanks for asking.

Still "free" money being paid for with deflated dollars, while my investments grow at a 12% YTD clip.

You on the other hand have a depreciating vehicle.

2cents

12%, I'm in : )

thinkagain

12%? Must be a conservative portfolio.

My health care stock portfolio is up over 50% YTD. Overall, I’ve seen a 25.68% increase in investments.

Contango

Re: "Must be a conservative portfolio."

More like balanced.

60/40 - equities-to-fixed. Little heavier in cash than I would like. Waitin' for interest rates to rise.

Beatin' the majority of hedge funds - works for me.

44846GWP

My vehicle, paid for. Your vehicle, you owe more than its worth. A vehicle is not an investment to make money, its to get you from one place to another.

Contango

But Zippy, the thousands I didn't spend (unlike you) is APPRECIATING. :)

Ya read like a dumb cheap German who'll never be wealthy.

Nemesis

Big dog,

Kettle to pot: Color check, over.

YoMamma

Where are the unions in Mexico? If they had unions I bet the cars would be safe. The unions are the best ever, that guy would be making more than $100/week too!

Pterocarya frax...

While you may be trying to be funny, you are actually correct. Thanks.

Nemesis

No, he'd be out of work.

Contango

Re: "making more than $100/week too!"

AND the vehicles would be even more expensive than they are currently.

Contango

Re: "If the cars will be exported to the United States or Europe, however, they must meet stringent safety laws,"

Good to know that GM likes to import vehicles from Mex. and "steal" American jobs huh?

Why isn't the UAW which owns GM stock doin' sumpthin' about this?

grumpy

"Why isn't the UAW which owns GM stock doin' sumpthin' about this?"

The corporate branch of the UAW is currently working on plans to cut the wages of the new hires to GM Mexico from $100 a day to $55 a day to shadow what it is paying the new hires for GM USA much like the pay scale for old GM compared to New GM in the USA. After all UAW must preserve it's profit for the good of UAW management. Thank you for your concern.

Signed,
You UAW Management Team (we are here for your own good, someone needs to tell you how to live your lives besides your gov't)

The Big Dog's back

Don't like a UAW shop, don't work for one. Tell your kid that too. I would imagine though that he would tell you to MYOB and put it where the sun don't shine.

grumpy

" I would imagine though that he would tell you to MYOB and put it where the sun don't shine."

Nope he laughs like &ell and says the fools just starting at GM walked into it with their eyes wide open. The employees hired under Old GM are laughing all the way to the bank, along with the UAW management team running GM, who are screwing the New GM hires, who do the same exact thing for a little more than half of what the New GM hires get. And they STILL call each other, union BROTHERS and SISTERS. Sounds like incest to me when you screw your brothers and sisters

deertracker

Give it a rest with all the stock talk. Why wouldn't the UAW own stock? Get over it. Facts are they send YOUR job to Mexico because it is cheaper but you get a cheaper product. Say what you will about regulations, they are necessary. America and Americans have only themselves to blame for all this mess.

2cents

"America and Americans have only themselves to blame for all this mess."

I have to agree there, greed across the board, from the bottom McDonald's worker to the highest paid whatever, CEO or politician!

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